The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.
Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.
Focus - Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.
Don't trust demos - Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.
Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.
Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.
The clues are in the details - The bottom line on your account balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.
Simulated Results - Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results - historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.
Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.
Risk Reward - If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.
Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.
Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.
Determination - Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.
Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.
Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).
One cross is all that counts - EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.
Wrong Broker - A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.
Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.
Interpret forex news yourself - Learn to read the source documents of forex news and events - don't rely on the interpretations of news media or others.
Nowadays, it's never been easier to break into the forex market. As opposed to the past, these days all you need is your own computer, a steady internet connection, and a bit of start up capital. You don't even need to risk any real money to learn as you can do it within the safe confines of a practice account online anytime you want. But if you want to make some real foreign forex money right away, there is one tool for trading which you must not overlook.
Roughly 30% of all traders are currently using some form of automated forex trade software to bring in a steady and reliable income from this market. This is software which you run on your own computer which does just that, it automatically trades currency for you. The ultimate goal is to keep you on the winning sides of your trades as often as possible to keep you earning foreign forex money in this market from trends and to minimize your losses around the clock.
Automated forex trade software is adept at doing this and can react to changes in the market faster than any other form of trading around today for the simple fact that it remains constantly connected to and analyzing real time market data, so that when a change occurs it is sophisticated enough to recognize that you'll lose money on this new pattern or not, and trade accordingly when necessary.
I mentioned that nearly a third of all traders are currently using automated forex trade software to secure some automated foreign forex money, this is up from the 17% roughly who were doing it just 5 years ago to show that this is quickly becoming the norm amongst traders. This begs the question, why is it so popular?
Not only does automated forex trade software keep some of the major campaign killers such as human emotions and error from factoring into your campaign because all trading which the program carries out is in direct correlation with how the market reacts and nothing more.
Also, because it's entirely automated, you don't need to tend to it ever or know a thing about the market to enjoy and see something come back out of it. Consequently beginners and casual traders looking to earn some quick and reliable income as well as experienced traders who are looking to supplement their existing trading income have been known to take advantage of it.
Forex software is a hard thing to understand for some people. There are many decisions that can be made from many aspects, and the customization factors may cause some people to shy away and run. The settings are there to allow you to tailor the software to your needs and desires. Each and every possible aspect of the Forex market and your involvement can be tailored to your liking. This may seem overwhelming and sometimes a bit much, but in the end it is you controlling your money and not someone else doing it for you!
Online Forex Software and its Perks!
Using online automated Forex software allows the human emotional aspect of trading to be detached. Greed and uncertainty and impulse can be removed from a situation, where the software will rely on the numbers and trends from recent past trading sessions. The trading is instant and with the time shifting aspect of trading, somewhere markets are always opened. This unprecedented level of access allows the trader additional chances to make profit, without having to conform to normal business hours that may not in fact fit in line with their calendars. The software can also instantly receive informational upgrades. What may take a human minutes and even hours to read, a program can read, interpret, react, and move on in a matter of seconds. Everything from price changes to potential cause and effect price shifts and even just small little shifts can be seen coming by a well written and reliable computer program.
Keeping your best interests at heart is a great policy. If something seems wrong to you, and you think that a potential software program or "business model" someone is offering you may be a scam, well then just trust your gut. Look up the business or anything relevant on Better Business Bureau, or even just simply check out any of the websites online that refer to whatever it is that has caught your eye. If you can see it chances are others have and have spread the word in one form or another.
